The Internal Revenue Service has filed a $1.6 million tax lien against Auto-Train Corp., charging the company failed to pass on the the government deductions that were withheld from employes' paychecks.
The liens filed in the District of Columbia in federal railroad retirement contributions paid by employes and $518,000 in federal income taxes withhled from paychecks last year.
The IRS has taken no further action to claim the railroad's assets and is negotiating with Auto-Train "to satisfy the liability." said a spokesman for the IRS regional office in Baltimore.
The railroad reportedly has reached an agreement with the IRS to pay the debt to the government once it obtains the money to do so. Neither IRS nor Auto-Train officials would comment yesterday on the reported settlement.
The tax claim is the latest in a series of financial problems for Auto-Train, the Washington-based railroad that carries passengers and cars between suburban Lorton and Florida.
The bank that owns Auto-Train's locomotives recently threatned to repossess the engines because lease payments are overdue. The railroad whose tracks Auto-Train uses has complained that rent on its rails have not been paid for months and has threatned to cancel its agreement. Hundreds of passengers who canceled reservations on the train have not been paid refunds, despite complaints by the U.S. Office of Consumer Affairs.
Company officials disclosed yesterday at Auto-Train's annual meeting of stockholders that Chairman Eugene Kerick Garfield is negotiating a $3.7 million loan from "a European financial institution."
Garfield did not attend the meeting, over which he had presided annually since he founded the company 10 years ago. Senior Vice President Richard Goldstein was in Europe, "finalizing negotiations" for the loan.
The annual meeting was adjourned after the routine reelection of Auto-Train board members. Goldstein said the session will be reconvened on Aug. 22 and that then Garfield will give a full report on the company's finances.
In a statement read at the shareholder session, Goldstein said the European borrowing being negotiated is a two-year loan that can be extended. The company will have to pay only the interest during the two years and then can negotiate repayment.
He said Auto-Train will pay 9 1/2 percent interest, including premiums on an insurance policy to cover assets pledged as collarteal on the loan.
IRS tax lien was not discussed at the annual meeting and has not been disclosed publicly by the corporation. After the meeting, disgruntled employes of the railroad complained to a reporter that their paychecks have bounced recently and that there seems to be some problems with their retirement contributions.
IRS officials later confirmed that the tax lien was filed on June 27. A tax lien "puts the other creditors on notice that the government is first in line" to collect from the taxpayer, IRS officials explained.